China to update AML rules with a focus on crypto transactions

Modhaus attracts $8M in advancing blockchain-based K-pop fan engagementModhaus, a South Korean Web3 startup focused on blockchain-driven K-pop promotion, recently announced that it has raised $8 million in Series A funding, according to a report by local news outlet Maeil Business Newspaper. This latest funding round brings the company’s total investment to over $12 million.Photo by C D-X on UnsplashKey investorsThis Series A funding was led by Sfermion, a Chicago-based venture capital firm focused on non-fungible tokens and the immersive internet. The investment round also saw participation from various investors, including SM Culture Partners, Laguna Investment, the KDDI Open Innovation Fund, Foresight Ventures, Reflexive Capital, NFT song collector Cooper Turley, Quantstamp CEO Richard Ma and Playco CEO Michael Carter.Modhaus had previously attracted investment from other players in earlier funding rounds. These included UNOPND, a venture division of Web3 venture capital firm Hashed; Naver D2SF; CJ Investment and Futureplay.Digital photo cards and tokensDoubling as an entertainment agency, Modhaus operates Cosmo, an app that empowers fans to play a role in their favorite artists’ operations. Through Cosmo, fans can purchase digital photo cards, earning tokens in return. These tokens then allow fans to vote on various aspects of their artists’ activities. The use of blockchain technology ensures that all votes are transparently and securely recorded, boosting the fan-artist relationship.Sfermion’s general partner, Dan Patterson, expressed enthusiasm about their investment in Modhaus, explaining that it “has innovatively bridged the K-pop fandom with both tangible and digital realms through NFTs. [The new] investment signifies more than just financial backing; it’s a venture into melding the energetic world of K-pop with the expansive narrative of the metaverse.”Jaden Jung, CEO of Modhaus, said, “K-pop fans possess keen insights. With their sharp eyes for talent and trendspotting, we aim to enhance artist value through amplified fan involvement.” He emphasized the crucial role of fan engagement in the entertainment industry, pointing out that Modhaus is dedicated to elevating this aspect to new heights. He referred to the achievement of girl group TripleS, which has garnered 1.74 million subscribers on YouTube since its debut in February of this year, as an example of what they envision for Cosmo. He suggested that Cosmo has the potential to evolve into a platform akin to LinkedIn or Kickstarter within the K-pop sector, aiming to maximize the value and reach of artists.Deepening artist-fan connectionsModhaus seeks to use the funds raised from this recent investment round to advance its Cosmo platform. This improvement aims to deepen the connections between fans and artists, providing fans with more opportunities to actively engage with and contribute to their favorite idol groups.At the helm of Modhaus are co-founders Jaden Jung and Kwanghyun Joseph Baek. Jung brings over two decades of experience as a producer at JYP Entertainment and Woollim Entertainment. Baek, on the other hand, has a background as the Chief Operating Officer at Playlist Originals, a digital content studio, and as a consultant at Bain & Company.Their team also includes Chief Product Officer Park Jae-hyun, formerly Product Owner at Viva Republica, the fintech company behind the internet-only bank Toss. Chief Creative Officer Kim Jong-soo has a history in the music industry as well, having produced girl groups like Dreamcatcher and Dal Shabet. Chief Business Officer Lee Gyu-hwa comes from MyMusicTaste, a K-Pop platform, while Chief Financial Officer Yang Ji-eun brings her experience from venture capital firm NCORE Ventures.

South Korea’s central bank, the Bank of Korea (BOK), plans to begin testing peer-to-peer (P2P) transactions with its central bank digital currency (CBDC) in October, according to the Seoul Economic Daily. This will mark the second phase of its ongoing CBDC pilot, Project Hangang, which currently allows 100,000 citizens to use digital tokens for payments at both online and offline stores. In the fourth quarter, the pilot will also introduce voucher programs enabling local governments to distribute welfare benefits.Photo by Mathew Schwartz on UnsplashSandbox deadline pressureThe BOK originally planned to gather feedback from participants in the first phase and refine the system before proceeding. However, the central bank decided to speed up the timeline, as the broader project is operating under a regulatory sandbox program that provides two years of regulatory flexibility. A BOK official noted, “Since the current test ends in June, we can’t wait too long to move forward. Also, the fourth quarter timeline is still tentative.” While the BOK focuses on its CBDC, Korean commercial banks are accelerating efforts to develop stablecoin infrastructure and launch related pilot projects, Edaily reported. These initiatives reflect growing expectations that stablecoins will become a key tool for cross-border payments. Banks see this as an opportunity to attract new customers and earn fees from crypto exchanges by facilitating stablecoin transfers through their own networks. One example is Project Pax, a joint initiative involving Shinhan Bank, Nonghyup Bank and Kbank, which is testing stablecoin transfers between South Korea and Japan. Led by Japan’s digital asset platform Progmat, along with Korea’s Fair Square Lab and Korea Digital Asset Custody, the project enables Korean banks to send won-based stablecoins to Japanese financial institutions and receive yen-pegged stablecoins in return. Rising stablecoin useAn executive at a local bank expressed concern that South Korea is falling behind in stablecoin adoption. He predicted faster uptake, noting that consumers can save time and money by avoiding traditional foreign exchange processes. He also cautioned that, without action, the private sector could take the lead in building cross-border payment networks, bypassing the traditional SWIFT system. Another banker urged financial authorities to establish clear regulations for stablecoins, stressing the need for oversight as stablecoins are increasingly used to move foreign currencies out of Korea. Contrasting perspectivesHowever, BOK Governor Rhee Chang-yong remains skeptical of stablecoins, arguing that CBDCs offer far greater transparency. He pointed to the volatility of unregulated stablecoins and warned that their widespread use—especially if issued by private financial institutions—could undermine the central bank’s role as the sole issuer of legal tender. That said, financial authorities appear to be exploring a regulatory framework where CBDCs and stablecoins can coexist. Sharing his personal view, one official noted that while the future of stablecoins is uncertain, it’s important to remain open to various possibilities. He added that agencies are also reviewing recent changes in U.S. federal law, along with regulations in Japan and the EU. 

A couple of recent reports have revealed how North Korean hackers have been moving funds to a Cambodian crypto payments platform while further insight has come to light with regard to how these hackers are compromising crypto companies. Huoine PayOn July 15, Reuters reported that Cambodian currency exchange and payments firm Huione Pay had received in excess of $150,000 in digital currency from a wallet associated with notorious North Korean hacking group Lazarus. Analysis of blockchain data demonstrated that the funds had been received by the Phnom Penh-headquartered payments firm in June 2023 and February 2024. Photo by allPhoto Bangkok on Unsplash‘Pig butchering’It’s understood that Lazarus stole those digital assets from three crypto firms during the months of June and July of 2023. While Huione has suggested that it was oblivious to the origin of the funds, a blog article by blockchain analytics company Elliptic, published to its website on July 10, suggested that “Huione Guarantee is an online marketplace that has become widely used by scam operators in South East Asia.”  Elliptic went on to assert that some of these scammers employ “pig butchering” techniques, where fraudsters manipulate the victim into investing into fraudulent crypto schemes. It added that “merchants on the platform offer technology, data and money laundering services, and have engaged in transactions totaling at least $11 billion.” The National Bank of Cambodia explained to Reuters that the company is not permitted to trade crypto and that it "would not hesitate to impose any corrective measures" against Huione. The platform is believed to have strong ties to Cambodia’s ruling family. One of the firm’s three directors is understood to be a cousin of the Cambodian Prime Minister, Hun Manet. The Lazarus hacking group is believed to have masterminded a $305 million hack of Japanese cryptocurrency DMM Bitcoin in May of this year. Pseudonymous on-chain investigator ZachXBT claimed on X that $35 million of the proceeds had been laundered through the Huione platform. Compromising crypto businessesIn a related development, a report by DL News published on July 15 has found that North Korean hackers are employing a new tactic in order to compromise crypto businesses. The hackers are scanning the internet for job postings advertised by the companies they’re targeting and submitting bogus applications. A report by the United Nations Security Council has revealed that in excess of 4,000 North Koreans have taken up employment with international technology firms. Part of the social engineering-based tactics employed by the hackers includes contriving to get employees within targeted companies to install malware.  Oftentimes, the resumes and LinkedIn profiles of real people are used in order to find a way in via the recruitment process. A report by DeFiLlama suggests that $664 million has been lost via instances of crypto hacking within the first half of 2024.